An acquisition mandate is a written statement of what a buyer will actually buy. Most are useless because they describe a mood rather than a filter — profitable, well-run, good people, the right fit. A mandate earns its keep when someone who has never met the buyer can look at a business and say yes or no without asking them.
In short
- Separate hard requirements from preferences. A mandate with only preferences cannot reject anything.
- State the deal breakers explicitly. They do more filtering than the criteria do.
- Put an expiry date on it. Stale intent that looks active wastes everyone's time, including yours.
Hard criteria are the ones that disqualify
A hard criterion is one where failing it ends the conversation. If a business two hundred miles outside your geography would still get a look when the numbers are good, then geography is a preference and should be recorded as one.
Being honest about this is uncomfortable and worth doing. Buyers who mark everything as essential either see nothing or quietly break their own rules, and both waste the same months.
- Industries, named specifically rather than as sectors
- Geography, with a real radius rather than a state
- Purchase price, minimum and maximum
- Earnings floor, stated as SDE or EBITDA — say which
- Whether seller financing is required or merely welcome
Name what earnings figure you mean
A mandate asking for businesses with at least $400,000 in earnings is ambiguous until it says whether that is seller's discretionary earnings or EBITDA. The difference on a small business is routinely a hundred thousand dollars or more, and a mandate that does not specify will be matched against both.
It is worth stating whether the floor applies to the last full year, a trailing twelve months, or an average — sellers will present whichever is highest, and a mandate that does not say has agreed to that in advance.
Write the deal breakers down
Deal breakers filter harder than criteria and are almost always left out. They are also the things buyers discover they care about only after wasting six weeks on something.
| Deal breaker | Why it matters | How to state it |
|---|---|---|
| Customer concentration | One account leaving can remove the profit | No single customer above a stated share of revenue |
| Owner is the business | You are buying a job, not an asset | Requires an existing manager, or owner works under a set number of hours |
| Licensing you do not hold | You may not legally be able to operate it | Name the licenses you hold or will not pursue |
| Premises you cannot keep | The business may not survive relocation | Minimum remaining lease term, assignable |
| Industries you will not own | Nobody wants to discover this at diligence | Say so plainly, without justifying it |
Say who you are and how you will pay
Sellers are being asked to disclose confidential information about the business they built. A mandate that does not identify the buyer, their backing, or their decision process is asking for trust while offering none.
It does not require publishing your balance sheet. It requires being specific enough that a seller can tell the difference between a funded buyer and someone exploring an idea — the source of funds, whether it is committed, who signs, and whether anyone else has to approve.
- Who the buyer is, individual or entity
- Source of funds, and whether the funding is committed or indicative
- Who can authorize an offer, and what approval it needs
- Advisors already engaged
- Realistic timeline from agreement to closing
Expire it, then renew it deliberately
A mandate written eighteen months ago by someone who has since bought something, or lost their funding, or changed their mind, is worse than no mandate. It looks like demand and is not, and it degrades trust in every other mandate alongside it.
Give it an end date — ninety or a hundred and eighty days is common — and renew it only by actively reconfirming the criteria. Renewal is also the moment to notice that what you have been looking at for six months is not what you wrote down.
Common questions
- How specific should a mandate be?
- Specific enough that a stranger could apply it without asking you a question. If it cannot reject a business, it is not a mandate. In practice that means named industries rather than sectors, a radius rather than a state, numeric floors and ceilings, and a stated earnings basis.
- Does a narrow mandate mean fewer opportunities?
- Fewer, and better. A broad mandate produces volume, most of which you reject after spending time on it, and it tells sellers and brokers nothing about what to bring you. Buyers who narrow their criteria generally see less and close more, because the people sourcing for them finally know what to look for.
- Should I say what I will pay?
- A range, yes. Refusing to indicate price is usually read as either inexperience or a plan to negotiate hard later, and it filters out sellers who might have been reasonable. A stated range with the earnings basis attached — say, four to five times SDE for businesses of this size — does far more good than harm.
- How often should a mandate be updated?
- Whenever your funding, timeline or appetite changes, and on a fixed schedule regardless. Ninety days is a sensible default. The discipline matters more than the interval: a mandate nobody has looked at in a year is a description of a buyer who no longer exists.
This is general information, not investment, legal, tax or valuation advice. Every business and every transaction differs; take professional advice on your own circumstances before acting.